Current through August 31, 2023
01.
Detail. The insurer or
insurance group will be as descriptive as possible in completing the CGAD, with
inclusion of attachments or example documents that are used in the governance
process, since these may provide a means to demonstrate the strengths of their
governance framework and practices. (3-31-22)
02.
CGAD Considerations. The
CGAD will describe the insurer's or insurance group's corporate governance
framework and structure including consideration of the following: (3-31-22)
a. The board and various committees thereof
ultimately responsible for overseeing the insurer or insurance group and the
level(s) at which that oversight occurs (e.g., ultimate control level,
intermediate holding company, legal entity, etc.). The insurer or insurance
group will describe and discuss the rationale for the current board size and
structure; and (3-31-22)
b. The
duties of the board and each of its significant committees and how they are
governed (e.g., bylaws, charters, informal mandates, etc.), as well as how the
board's leadership is structured, including a discussion of the roles of chief
executive officer (CEO) and chairman of the board within the organization.
(3-31-22)
03.
Factors. The insurer or insurance group will describe the policies
and practices of the most senior governing entity and significant committees
thereof, including a discussion of the following factors: (3-31-22)
a. How the qualifications, expertise and
experience of each board member meet the needs of the insurer or insurance
group. (3-31-22)
b. How an
appropriate amount of independence is maintained on the board and its
significant committees. (3-31-22)
c. The number of meetings held by the board
and its significant committees over the past year as well as information on
director attendance. (3-31-22)
d.
How the insurer or insurance group identifies, nominates and elects members to
the board and its committees. The discussion should include, for example:
(3-31-22)
i. Whether a nomination committee is
in place to identify and select individuals for consideration.
(3-31-22)
ii. Whether term limits
are placed on directors. (3-31-22)
iii. How the election and re-election
processes function. (3-31-22)
iv.
Whether a board diversity policy is in place and if so, how it functions.
(3-31-22)
e. The
processes in place for the board to evaluate its performance and the
performance of its committees, as well as any recent measures taken to improve
performance (including any board or committee training programs that have been
put in place). (3-31-22)
04.
Additional Factors. The
insurer or insurance group will describe the policies and practices for
directing senior management, including a description of the following factors:
(3-31-22)
a. Any processes or practices
(i.e., suitability standards) to determine whether officers and key persons in
control functions have the appropriate background, experience and integrity to
fulfill their prospective roles, including: (3-31-22)
i. Identification of the specific positions
for which suitability standards have been developed and a description of the
standards employed. (3-31-22)
ii.
Any changes in an officer's or key person's suitability as outlined by the
insurer 's or insurance group's standards and procedures to monitor and
evaluate such changes. (3-31-22)
b. The insurer's or insurance group's code of
business conduct and ethics, the discussion of which considers, for example:
(3-31-22)
i. Compliance with laws, rules, and
regulations; and (3-31-22)
ii.
Proactive reporting of any illegal or unethical behavior.
(3-31-22)
c. The
insurer's or insurance group's processes for performance evaluation,
compensation and corrective action to ensure effective senior management
throughout the organization, including a description of the general objectives
of significant compensation programs and what the programs are designed to
reward. The description will include sufficient detail to allow the director to
understand how the organization ensures that compensation programs do not
encourage and/or reward excessive risk taking. Elements to be discussed may
include, for example: (3-31-22)
i. The board's
role in overseeing management compensation programs and practices.
(3-31-22)
ii. The various elements
of compensation awarded in the insurer's or insurance group's compensation
programs and how the insurer or insurance group determines and calculates the
amount of each element of compensation paid; (3-31-22)
iii. How compensation programs are related to
both company and individual performance over time; (3-31-22)
iv. Whether compensation programs include
risk adjustments and how those adjustments are incorporated into the programs
for employees at different levels; (3-31-22)
v. Any clawback provisions built into the
programs to recover awards or payments if the performance measures upon which
they are based are restated or otherwise adjusted; (3-31-22)
vi. Any other factors relevant in
understanding how the insurer or insurance group monitors its compensation
policies to determine whether its risk management objectives are met by
incentivizing its employees. (3-31-22)
d. The insurer's or insurance group's plans
for CEO and senior management succession. (3-31-22)
05.
Oversight. The insurer or
insurance group will describe the processes by which the board, its committees
and senior management ensure an appropriate amount of oversight to the critical
risk areas impacting the insurer's business activities, including a discussion
of: (3-31-22)
a. How oversight and management
responsibilities are delegated between the board, its committees and senior
management; (3-31-22)
b. How the
board is kept informed of the insurer's strategic plans, the associated risks,
and steps that senior management is taking to monitor and manage those risks;
(3-31-22)
c. How reporting
responsibilities are organized for each critical risk area. The description
should allow the director to understand the frequency at which information on
each critical risk area is reported to and reviewed by senior management and
the board. This description may include, for example, the following critical
risk areas of the insurer: (3-31-22)
i. Risk
management processes (An ORSA summary report filer may refer to its ORSA
summary report pursuant to Title 41, Chapter 63, Idaho Code);
(3-31-22)
ii. Actuarial function;
(3-31-22)
iii. Investment
decision-making processes; (3-31-22)
iv. Reinsurance decision-making processes;
(3-31-22)
v. Business
strategy/finance decision-making processes; (3-31-22)
vi. Compliance function; (3-31-22)
vii. Financial reporting/internal auditing;
and (3-31-22)
viii. Market conduct
decision-making processes. (3-31-22)